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5G: Separating fact from hype

The new wave of wireless technology known as 5G evokes images of automated factories, cutting-edge consumer products and futuristic cities – a world in which data simplifies our daily lives.

Photo: rcrwireless.com)

2019 sees the U.S. launch of 5G in a blaze of publicity, but in reality, much of its transformative power is longer-term and in some unexpected areas.

In multiple reports, the J.P. Morgan Research team explores the future of 5G, what telecommunication carriers are doing and how this technology will ultimately disrupt the industry.

Mobile networks rapidly evolved over the last three decades, maturing from first generation networks in the 1980s to the current digital-based fourth generation (4G) networks.

The mobile industry evolved quickly over the past three decades. (Photo: theverge.com)

The latest technology powered mobile phones to stream high-definition videos and support apps like FaceTime – but the next step is less tangible to the consumer.

The rationale behind the move to 5G – the next generation wireless technology standard – is to not only enhance mobile network capabilities such as virtual reality but to support factory automation, autonomous driving, smart cities and tactile internet.

“The evolution from 2G to 3G and 3G to 4G was all about faster data bandwidth to enable the rise of mobile broadband. The evolution from 4G to 5G is not all about increasing data throughput only, but of enabling a world of mobile applications in multiple end markets from utilities to driving, to gaming, virtual reality, broadcast and the industrial market,” said Sandeep Deshpande, Head of European Technology, J.P. Morgan

5G is expected to support factory automation, among other uses.
(Photo: Lantech Communications Global)

What does this mean for the consumer and our mobile phones? Initial 5G commercial deployments in 2019 by large carriers such as Verizon will focus primarily on speed, mobility, latency and area traffic capacity that would enhance existing video and audio experiences by taking them to a new level – such as 360-degree video streaming.

But besides this, not much for a long time, according to Philip Cusick, head of U.S. Telecom Services and Communications Infrastructure Research at J.P. Morgan.

“Your phone may work incrementally better and perhaps you’ll be able to download a movie in 10 seconds, but the real power behind 5G is its power to transform enterprise.”

– Philip Cusick

5G networks are coming into existence over the next twelve months. While Apple announced it would launch a new 5G iPhone to market by September 2020 and 5G Android phones will pop up in the meantime, the majority of users will notice more incremental rather than transformative change. Unlike the massive difference users noticed between 3G and 4G, which enabled the easy consumption photos, video and mobile streaming, 5G is less about mobile speed – though phones will continue to get faster – than about opening up new wireless applications.

 IoT and connected cars are still a nebulous concept — very few people can describe a tangible model. So how do you justify building 5G? We think carrier investment is more coincidental than causal in terms of 5G ramping up, and 5G is essentially drafting off other network upgrades. Philip Cusick U.S. Telecom Services and Communications Infrastructure, J.P. Morgan

Android and Apple users will notice incremental changes when 5G rolls out.

Network Slicing and Net Neutrality

A key element behind 5G is “network slicing” – the ability for carriers to prioritize traffic and charge different prices for various traffic profiles such as speed, latency and reliability. This technology allows the likes of Verizon and AT&T to control factors including speed, latency and bit prioritization depending on the use case. An important advantage of the 5G ecosystem, it is a significant driver of potential incremental revenue for such carriers.

Down the road, a carrier could charge a company like General Motors one rate for high priority, low latency bits required for self-driving cars and another rate for the WiFi children would use in the back of the car.

The notion of slicing isn’t without controversy, however.

“One of things people talk about with 5G is net neutrality — not allowing carriers to prioritize treatment,” says Cusick. “But that is the exact opposite of the main value of 5G, which is that every bit doesn’t need the same priority. This is not about Twitter or Facebook getting different speeds – it is about running real businesses over wireless.”

(This article was researched and published by J.P. Morgan Global Research Department).